06-10-2006: Muhibbah's stream of good news

Muhibbah Engineering (RM2.16) has benefited from a stream of good news over the past few months, including the successful listing of its crane manufacturing unit Favelle Favco, a major LNG construction contract in Yemen, the opening of a new airport terminal in Siem Reap, Cambodia and the securing of a third Cambodian airport concession in Sihanoukville.

As a result, Muhibbah's share price has rallied sharply, particularly with increasing interest from institutional investors. Over the past few months, several prominent foreign research houses have initiated coverage and the company was one of eight selected to participate in a recent Bursa Malaysia-SIAS investor roadshow in Singapore.

Year-to-date, Muhibbah's share price has tripled from 70 sen to RM2.16, vindicating our bullish view on the company since we first recommended the stock a year ago.

02-10-2006: Lukewarm interest

Trading on Bursa got off to a slow start for the last quarter of 2006. Market volume contracted further on the back of lacklustre investor interest. And there’s little indication that such trading condition is about to improve, at least not in the near term.

The number of shares traded fell to just 365 million on Oct 2, down from the daily average of 430 million in the last week. Investors are evidently not budging from the sidelines, despite the benchmark KL Composite Index reaching multi-year high level.

Indeed, aside from some interest in a handful of blue chip stocks, investors, by and large, appear unconvinced of the market’s prospects in the coming days or perhaps even weeks. Positively, prevailing firmer sentiment in the US and regional markets should limit our market’s downside. But it’s difficult to say when interest will return to the local bourse.

The KLCI closed two points higher on Oct 2 on a spurt of last-minute buying but market breadth was in the red for much of the day. Losers outnumbered gainers by about four to three at the close. DiGi was the biggest gainer, adding 50 sen to RM13 ahead of its second capital repayment of 60 sen per share.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.